Regulatory impasse stalls stablecoin law in South Korea.
- Dispute over issuers delays stablecoin law.
- FSC and Bank of Korea disagree.
- Investor protection remains a priority.
The regulation of stablecoins in South Korea faces a stalemate that has delayed progress on the so-called "Basic Digital Asset Law." The main point of contention lies in... They will be able to issue these tokens, which are considered strategic for the future of the cryptocurrency market in the country.
The proposal under review was presented by the Financial Services Commission and establishes stringent requirements for stablecoin issuers. Among these requirements is the obligation to maintain reserve assets in bank deposits or government securities, as well as entrusting 100% of these reserves to custodian institutions, such as commercial banks.
The central objective of the initiative is to reduce systemic risks and prevent the eventual bankruptcy of a stablecoin issuer from directly impacting investors. The logic follows principles already applied to the traditional financial system, focusing on transparency and responsible reserve management.
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In addition to rules for stablecoins, the bill expands obligations for digital asset service providers. These participants would have to comply with disclosure standards, terms of use, and advertising similar to those required of financial institutions. In cases of cyberattacks or operational failures, liability for damages could be assigned even without proof of fault.
Another relevant point in the text is the possible reopening of the path for initial coin offerings. Local projects that meet strict disclosure and risk control criteria could be authorized.
Despite its broad scope, the law remains stalled by institutional disagreements. The Bank of Korea argues that the issuance of stablecoins should be restricted to consortia in which banks hold at least a 51% stake. The Financial Services Commission disagrees, arguing that a fixed limit would discourage technology companies and reduce innovation in the crypto sector.
The two authorities also cannot reach a consensus on the creation of a new advisory body to license issuers. While the central bank supports a specific committee, the FSC considers the measure redundant within the current structure.
Meanwhile, the Democratic Party, which leads the government, is working on an alternative proposal to consolidate different parliamentary initiatives on digital assets. The topic gained even more relevance after President Lee Jae Myung prioritized the development of stablecoins backed by the Korean won, focusing on monetary sovereignty in the face of the predominance of tokens pegged to the US dollar.
The Basic Law on Digital Assets represents the second stage of the South Korean regulatory framework for cryptocurrencies. The first phase, in effect since 2024, focused on combating unfair practices such as price manipulation and insider trading, reinforcing the country's commitment to a more structured market.
